Britain, EU discuss risks, reforms, in inaugural financial services meeting

Officials from Britain’s finance ministry and the European Commission have discussed geopolitical risks and the vulnerabilities of non-bank financial firms, in the first official forum between the two sides on finance since Brexit.

The inaugural meeting of the long-delayed regulatory cooperation forum took place in London last Thursday, mirroring a set-up the European Union has long had with the United States to discuss regulatory issues.

In a joint readout published on Monday, the two parties said they discussed the risks related to the “current challenging geopolitical situation”, without elaborating, and said their respective financial sectors remained resilient.

Other risks were discussed, including the “critical” need to pursue international reforms to address vulnerabilities outside the banking system, the statement said, as well as wider financial reforms being pursued by both sides.

The next meeting is expected to take place in spring 2024 in Brussels, the statement added.

A forum was envisaged under Britain’s Brexit deal with the EU, but its creation was delayed due to spats over the treatment of trading relations in Northern Ireland, which were resolved earlier this year by the Windsor Agreement.

Brussels has stressed that the new forum has no remit to decide on EU market access for UK financial services which were largely cut off from the bloc due to Brexit.

Instead, it will give regulators on both sides the chance to explain upcoming rules, particularly in cases where they may diverge, to avoid flashpoints.

The financial sector, however, is hoping the forum will build political trust on both sides over time to potentially lead to better UK access.

The bloc is approving a law to cut use by EU banks of derivatives clearing houses in London, with UK clearers’ access to EU customers due to expire in June 2025.

Adam Farkas, chief executive of markets industry body AFME, said the forum was an opportunity to lay the ground for a cooperative, stable and trusting long-term relationship.